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Upgrade from Your First Green Square Apartment Without Regret

Working out whether to sell, keep or rent out your first Green Square apartment when you upgrade comes down to five numbers: equity, deposit gap, cash buffer, safe repayments and realistic rent. Use this suburb-specific, decision-grade checklist to choose a path you can act on this week.

Published 4 Sept 2026Updated 4 Sept 20265 min read

Key Takeaway

To decide whether to sell, keep or rent out a first Green Square apartment when upgrading, borrowers should model two scenarios at interest rates 2–3 percentage points higher than today and include lender shading of rent by around 20–30%. The key tests are usable equity, deposit gap, post-move cash buffer, safe repayment ratio (ideally under 35% of net income), and net rental cashflow. The most robust choice is the option that preserves a 6–12 month buffer and avoids crossing that repayment speed limit.

Upgrade from Your First Green Square Apartment Without Regret

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The decision to sell, keep or rent out your first Green Square apartment when you upgrade comes down to five numbers: your usable equity, the deposit gap on the new place, post‑move cash buffers, safe repayment level and realistic net rent. Run those numbers under a 2–3% interest rate rise and the answer usually becomes obvious.

Green Square apartment packed for moving with alternative view as rental. Deciding whether to sell or rent out your first Green Square apartment hinges on a few key numbers.

Step 1: Work out your equity and deposit gap

Start with what your Green Square or Zetland place is actually worth, not what you hope it’s worth.

Get a conservative value – use 2–3 online estimates plus a local agent’s appraisal and take the lower end, especially for high‑density or mixed‑use buildings where lenders are cautious (see /insights/high-density-mixed-use-green-square-lender-rules).
Subtract your current loan – that’s your gross equity.
Apply a realistic LVR – most upgraders aim for 80% LVR on the new home to avoid LMI.

Worked example
– Current Green Square unit value: $900,000 (conservative)
– Loan: $600,000 → equity $300,000
– Target upgrade home: $1,400,000
– 20% deposit + costs (say 5%: stamp duty, legals, moving): ~$350,000

You’re already $50,000 short if you keep the unit and don’t sell.

Step 2: Apply the three safety tests

Once you know the gap, apply these tests to both scenarios: sell vs keep and rent out. ### 1. Repayment “speed limit” A practical internal limit is to keep total home and investment loan repayments below about 35% of net household income when stress‑tested 2–3% above current rates (see /insights/keep-or-sell-old-home-high-end-upgrade). – Add up the proposed new home loan + any remaining unit loan. – Use a rate 2–3% higher than today. – Divide monthly repayments by your after‑tax household income. If keeping the unit pushes you above about **35% of…

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Frequently asked questions

You can, if the rest of your position is strong. A modest negative cashflow can be acceptable where your total home and investment repayments stay under about 35% of net income when tested 2–3% above current rates, and you still hold a 6–12 month cash buffer. If those tests fail, keeping the unit usually adds too much risk.

Lenders typically shade rent, counting only about 70–80% of the expected rental income, and they ignore most tax benefits. They also add interest rate buffers to all loans when assessing capacity. This means your borrowing power is usually lower than your own back‑of‑envelope calculations if you keep the old unit.

Often it is, because interest on your new home loan is not deductible, while interest on the former home used as an investment generally is. However, the loan splits must clearly match actual purposes, and you need a plan for when any interest‑only period finishes. Always confirm the structure with both your broker and tax adviser.

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